Facebook’s Centralized Crypto Could Net The Company $19B: Why This Is Good

Over recent weeks, some of the world’s largest institutions have announced crypto-centric offerings. While optimists argue that these organizations are looking to establish a decentralized world, more likely than not, firms like Facebook and JP Morgan are just looking to bolster their bottom line.

A recent research note from an analyst at the London-headquartered Barclays would confirm this.

Barclays: Facebook’s Blockchain Foray To Be Extremely Profitable

Per CNBC, which cited research compiled by Barclays’ Ross Sandler, the Silicon Valley-based Facebook may stand to gain $19 billion in revenue by 2021 for the launch of Facebook Coin (FBCoin). Sandler explained that if worst comes to worst, the social media giant may ‘only’ net $3 billion revenues from the digital asset, purported to be a stablecoin first slated to be centered around use in Facebook-owned instant messaging application WhatsApp.

He based his analysis on the Google Play Store’s revenue per user figure, which amounts to $6. With Barclays expecting for FBCoin to become the ubiquitous asset for the Facebook ecosystem, which has over three billion participants, $19 billion was extrapolated.

Sandler went on to explain the effect this offering could have on Facebook’s public shares:

“Merely establishing this revenue stream starts to change the story for Facebook shares in our view… Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders. ”

He notes that Facebook launching a payment-centric digital asset could be a saving grace for the company, especially if tides turn against Mark Zuckerberg’s brainchild. In other words, FBCoin could be a much-needed way for Facebook to diversify its revenue streams, especially after the Cambridge Analytica imbroglio and privacy debacles of a similar caliber.

FBCoin, A Net Benefit For Crypto?

While some would argue that the $19 billion in potential revenue that would appear as a result of Facebook’s cryptocurrency only accentuates the venture’s centralized nature, an argument can be made that FBCoin is a net benefit to the broader space. Changpeng “CZ” Zhao, for instance, recently took to Twitter to argue that any form of adoption is beneficial, especially when you boil things down to the nitty-gritty.

Unpopular opinion: JPM/FB coins.

In a decentralized world, anyone can do as they please (within limits, so long as they don't hurt others). The more people adopt #crypto, the better.

The Binance chief executive wrote that in an idealistic, fully decentralized world, people do as they please. CZ is likely hinting at his sentiment that the mainstream adoption of centralized cryptocurrencies and implementations of blockchain could be an end to get to decentralized means.

Zhao’s quip came just a week after Ari Paul of BlockTower Capital made a similar comment. Paul noted that while FBCoin and a similar asset from banking powerhouse JP Morgan are inherently “uninteresting” to fervent cryptocurrency advocates, who base their views on disintermediation, centralized cryptocurrencies will “increase global interest dramatically.”

2/ JPMcoin, facebookcoin, etc, are certainly inherently uninteresting to those of us interested in censorship resistance, seizure resistance, depreciation resistance, and self-sovereign money. They will produce some confusion and annoying article headlines by journalists.

Backing his point, the BlockTower founder laid out a hypothetical scenario, in which 10% of the assumed 300 million that adopt the cryptocurrency “stumble across Bitcoin.” This influx of 30 million crypto-curious would single-handedly double the size of Bitcoin’s community no questions asked.

Paul added that blockchain ecosystems propped up by traditional firms will also provide infrastructure and services that could be used “directly or indirectly” with permissionless cryptocurrencies. Thus, Paul concludes that while some are wary of the threat Facebook and JP Morgan pose to decentralization, their crypto projects could be a net benefit for the broader space.

If the Barclays analyst’s prediction comes to fruition, Facebook may be enticed to delve even deeper into this space, thus pushing adoption even further. However, as it stands, the supposed digital asset has yet to launch, meaning that FBCoin could easily be rather underwhelming. But, many pundits have their bets on the cryptocurrency being a catalyst for adoption in the years to come.

I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact NickC@blockonomi.com

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